Actelion announces third quarter 2010 financial results

As of 30 September 2010, Actelion had cash, cash equivalents and marketable securities of CHF 1.4 billion. In addition, Actelion holds 10.3 million treasury shares.

Jean-Paul Clozel, M.D. and Chief Executive Officer of Actelion commented: "Given the challenging market conditions in the pharmaceutical industry, I am satisfied with the ongoing commercial performance of our marketed products. In clinical development the Phase III study of clazosentan in non-traumatic subarachnoid hemorrhage disappointingly did not meet its primary endpoint and consequently we have also taken the decision to discontinue enrollment into the second Phase III study with clazosentan."

Jean-Paul Clozel added: "Strategically, Actelion is committed to growing and strengthening its PAH franchise: New molecules including macitentan and selexipag will enable us to build on the success of Tracleer. As an independent company, we are best positioned to achieve this goal as well as to continue to innovate in other disease areas."

Jean-Paul Clozel concluded: "Given our confidence in the performance of our marketed products, our pipeline and our commitment to managing our cost base in response to a challenging environment for innovative medicines, we're pleased to commence an 800 million Swiss Franc share repurchase program that enhances Earnings-Per-Share (EPS) for our shareholders. The size of the repurchase program leaves the company with full strategic flexibility to pursue appropriate product acquisitions and to engage in partnerships for several of our innovative compounds when appropriate to maximize their value."

Andrew J. Oakley, Chief Financial Officer of Actelion commented on the third quarter 2010: "On an operational level, I am pleased with the solid top-line growth for our marketed products. However, both top and bottom-line have been adversely impacted by pricing pressure as well as by an unfavorable currency environment."

Andrew J. Oakley continued: "In addition, legal costs have increased due to a previously announced lawsuit filed against Actelion Ltd and certain subsidiaries in a Californian Superior Court in relation to the CoTherix acquisition. Actelion has reviewed the accusations, disagrees with the factual and legal assertions, and is preparing to defend itself against the claims in a jury trial set to begin in January 2011."

Andrew Oakley added: "Unforeseen events excluded, I can confirm Actelion's financial guidance for 2010, with top-line growth expected to be above 10 percent in local currencies and Non-GAAP EBIT to increase - again in local currencies - between 21 and 24 percent."

Andrew Oakley concluded: "For 2011, I assume that ongoing pricing pressure will result in product sales - in local currencies - to increase in the mid-single digit range. Despite improvements on the operational level resulting from our commitment to carefully control our cost base, the 2011 Non-GAAP EBIT is expected to be below 2010 levels, especially due to the recognition of S1P1 milestone revenues during 2010 that will not be repeated."

Revenue performance
Product sales for the third quarter of 2010 were CHF 445.7 million (Q3 2009 CHF 431.4 million), an increase of 9 percent in local currencies with 45 percent coming from the United States, 38 percent from Europe and 17 percent from the rest of the world. Product sales growth was mostly driven by patient demand.

Sales in the third quarter of 2010 of Tracleer® (bosentan) increased by 12 percent in local currencies and reached CHF 399.8 million compared to CHF 375.5 million for the same period in 2009.

During the third quarter of 2010, Ventavis® (iloprost) had sales in the United States of CHF 28.9 million compared to CHF 40.0 million in the third quarter of 2009. Q3 2009 was the last quarter of Ventavis® as the only inhaled therapy for PAH.

The US launch of Actelion's fourth product, Veletri® (epoprostenol for injection), a parenteral prostacyclin formulation providing the efficacy of epoprostenol with an increased stability at room temperature without the use of ice packs, is proceeding well in line with our expectation. Sales of this product in the third quarter amounted to CHF 0.8 million.

Sales of Zavesca® (miglustat) for the third quarter of 2010 increased by 11 percent in local currencies to reach CHF 16.2 million compared to CHF 15.9 million during the same period last year. The multicenter, open-label, non-comparative, prospective study MAINTENANCE with miglustat (Zavesca®) in patients who transferred from enzyme replacement therapy to oral Zavesca® has recently been successfully concluded. Data analysis is ongoing and the study findings will be discussed at upcoming scientific meetings.

Otto Schwarz, President of Business Operations of Actelion commented: "Demand has remained very satisfactory for all of our marketed products. Austerity measures in many markets and the US healthcare reform are increasing the pricing pressure and are also affecting, in some territories, health care utilization. Going forward, we will continue to focus on both our top-line growth opportunities as well as operational efficiencies."

Contract revenues for the third quarter of 2010 were CHF 5.5 million compared to CHF 15.9 million in the third quarter of 2009. This reduction is the result of the milestones from the selective S1P1 receptor agonist collaboration with Roche being fully recognized as of June of 2010 and milestone recognition period associated with the development of almorexant being lengthened.

Operating expenses
Total operating expenses for the third quarter of 2010 were CHF 350.9 million compared to CHF 326.9 million for the same period in 2009, an increase of 7 percent. The increase was driven by ongoing investments into both R&D as well as to further expand the use of our marketed product.

Research and Development (R&D) expenses in the third quarter of 2010 were CHF 113.7 million compared to CHF 109.3 million in the third quarter of 2009. Non-GAAP R&D expenses for the third quarter of 2010, which excludes stock-based compensation expense and amortization and depreciation, were CHF 99.4 million compared to CHF 97.2 million in the third quarter of 2009.

Selling, General and Administrative expenses (SG&A) for the third quarter of 2010 were CHF 177.0 million compared to CHF 149.9 million in the third quarter of 2009. Non-GAAP SG&A expenses for the third quarter of 2010, which excludes stock-based compensation expense and amortization and depreciation, were CHF 161.3 million compared to CHF 136.1 million in the third quarter of 2009.

Operating income
Operating income for the third quarter of 2010 was CHF 100.3 million compared to CHF 120.4 million for the same period in 2009, a decrease of 2 percent in local currencies.

In order to better reflect the company's profitability, Actelion continues to report non- GAAP EBIT, which excludes employee stock options, amortization and depreciation as well as other one-off charges that distort comparison.

Non-GAAP EBIT for the third quarter of 2010 was CHF 141.3 million, an increase of 1 percent in local currencies compared to the same period last year.

Net income
Net income for the third quarter of 2010 amounted to CHF 105.3 million compared to CHF 108.5 million during the third quarter of 2009.

Net income for the period includes interest income of CHF 0.7 million, interest expense of CHF 1.1 million, amortization of debt discount of CHF 4.7 million, other financial income of CHF 22.8 million as well as an income tax expense of CHF 12.7 million.

US GAAP earnings per share on a fully diluted basis in the third quarter of 2010 decreased by 1 percent to CHF 0.87 compared to the same period a year ago. Non-GAAP earnings per share on a fully diluted basis increased by 3 percent to CHF 1.21.

Clinical Development
On 27 September 2010, Actelion announced the initial results of CONSCIOUS-2, a clinical study evaluating the safety and efficacy of clazosentan in reducing vasospasm-related morbidity and all-cause mortality in clipped patients following aneurysmal subarachnoid hemorrhage (aSAH). The primary endpoint was not met, showing a non-significant relative risk reduction of 17 percent in favor of clazosentan (p=0.1).

Following recent consultations with the Steering Committee of CONSCIOUS-3, a clinical study similar to CONSCIOUS-2, Actelion has now taken the decision to discontinue enrollment in this study. Actelion will now collect and analyze all data from CONSCIOUS- 3 and other clazosentan studies.

All other clinical development programs are proceeding as outlined in the company's Half- Year report issued on 20 July 2010.

Upcoming events
• Actelion to report FY 2010 financial results on 17 February 2011 • Actelion will hold its Annual General Meeting on 05 May 2011


Contact:
oland Haefeli Vice President, Head of Investor Relations & Public Affairs Actelion Pharmaceuticals Ltd, Gewerbestrasse 16, CH-4123 Allschwil +41 61 565 62 62 +1 650 624 69 36 www.actelion.com